So Much for That Financial Early-Warning System

After the 2008 financial crisis, Congress set up a new agency — the Office of Financial Research — with an ambitious goal: to ensure that regulators would never again be as blind as they were before and during the crash.

The agency hasn’t lived up to expectations, and the Trump administration is apparently planning to scale it back. Here’s a better idea: Make the OFR work like it was supposed to.

The crisis revealed just how essential good information is. During the subprime-mortgage boom, regulators couldn’t properly track defaults or leverage. They couldn’t see how various parts of the financial system were linked, or where new derivatives had amplified and concentrated risk. As a result, they failed to recognize the scale of the oncoming disaster.